The Reform of Charitable Constitutional Purposes: Should Australia Follow England’s Path in Aligning Charitable Trusts and Corporations?

1. INTRODUCTION

Both England and Australia historically maintained a key common law distinction for reforming the purposes of charitable organisations. The charitable trust was subject to the rigours of the equitable cy-près doctrine which limits the circumstances in which reform can occur and subjects it to control by the court,¹ or in England, the Charity Commission or the court. By contrast, it has been more straightforward to reform ordinary incorporated charities, following a vote of the members (though subject to consent of the Charity Commission in England).² There have been recent reforms to the trust/corporations distinction in England, with the effect that the purposes of both charitable trusts and ordinary incorporated charities will be uniformly modifiable following a vote. That vote will still be subject to Charity Commission consent. This recent reform is part of a ‘direction of travel’ rather than ‘sudden revolution’ in England, but that direction is towards a parting of the ways between England and Australia, and an erosion of the trusts/corporations distinction.

It will be seen that England has progressively relaxed the requirements for charitable trust alteration. It will also be seen that England has made the alteration of the purposes of incorporated charities harder to achieve. By contrast, in relation to trust reform, while there has also been statutory relaxation in Australia outside of the territories, that jurisdiction remains closer to the traditional common law model. Recognising this evolving difference permits critical reflection on the value of the trusts/corporations distinction, and marks an opportunity to question whether Australia should follow England’s path.

While the focus in this analysis is on Australia and England, the analysis pertains to many common law jurisdictions. England, Australia and other common law jurisdictions, such as Ireland and New Zealand, have long been in dialogue on matters of charitable constitutional reform.³ In the light of this international dialogue, there are a number of key policy questions for jurisdictions such as Australia to consider. For instance, as it has become easier to reform trusts the English model has reduced the ability of founders to protect their plans from alteration in the years after the charity has been established. Further, because trusts and incorporated charities can be understood as having different functions, the reform has implications for doctrinal coherence and the development of the law. Finally, for reasons such as the federal separation of powers in jurisdictions such as Australia, there may be very different administrative arrangements for charity-constitutional reform, including the absence of a national regulator with charity–constitutional reform powers.

The recent English reform process flowed from a Law Commission report, Technical Issues in Charity Law.⁴ Owing to its scope, it did not directly consider substantive or theoretical questions. However, the Law Commission, at least implicitly, did take the view that founders ought still be able to limit the circumstances in which a trust constitution might be altered, as after acknowledging that donors sometimes choose trusts in order to limit future constitutional changes, the Law Commission stated that it did not want to, ‘by-pass the entire law of cy-pres.’⁵ Its aim was to align the law as it applies to incorporated charities and charitable trusts for reasons of simplicity and clarity while making only a technical change to the law. Even so, this analysis develops the view that the reforms will have a substantive impact, making the alteration of trusts easier, and the alteration of incorporated charities harder. Yet a key goal of the analysis is not to critique the Law Commission, or the process of reform in England. Nor is it to build a case that there has been a sudden revolution or dramatic change in English law. Instead, the goal of the analysis is to use the ‘reform moment’ in England, and the evolving difference in approach between England and Australia, as a springboard for an assessment of the trusts/corporations distinction and its value.

The methodology adopted in the analysis is influenced by the approach of the English Law Commission in bracketing trusts and incorporated charities in a single framework. In aligning the entities, it has necessitated a new amalgamated scholarly approach, as doctrinal writing on the constitutional reform of charities has typically focused exclusively on trusts or understood trusts and incorporated charities as ‘walled off’ in distinct regulatory frameworks.⁶ From a comparative perspective, our aim is to use England and Australia as exemplars of the doctrinal, theoretical and policy differences and consequences of alignment versus non-alignment. We are sensitive to the specific legal and broader social contexts in each jurisdiction, but the goal is to inform not just the development of Australian law, but also that of other common law jurisdictions.

The analysis builds through five stages. First, it is seen that the Law Commission’s reforms have made it easier to reform the constitutional purposes of charitable trusts and simultaneously more difficult to reform the constitutional purposes of incorporated charities. Second, we show that the traditional distinction between trusts and incorporated charities persists in Australia. Third, the commonalities and differences between England and Australia are drawn out. Fourth, there is an assessment from a theoretical and policy-based perspective of whether or not Australia should alter its current model and follow England’s reform path in aligning the law of constitutional reform for charitable trusts and incorporated charities. Finally, the analysis concludes.

2. ENGLAND’S EROSION OF THE TRADITIONAL TRUSTS/CORPORATIONS DISTINCTION

Prior to the reforms in the Charities Act 2022, incorporated charities and trusts were subject to separate legal frameworks in matters of constitutional purpose reform.⁷ The new legislation aligns the frameworks of the charitable trust, and the traditional charitable company limited by guarantee, and its newer and closely related brethren, the charitable incorporated organisation (CIO).⁸ We argue that England’s new ‘one size fits all’ model creates an ‘aligning movement’ in which the larger and more significant trusts become easier to reform, but incorporated charities become harder to reform.

Under the reformed law, a charitable trust can be altered by a vote of 75 per cent of the trustees, subject to consent of the Charity Commission.⁹ On a plain reading of the legislation, which allows amendment of the ‘trusts of the charity’ where trustees consider it ‘expedient’, this power cannot be ousted.¹⁰ This aligns trusts with charitable companies limited by guarantee, or CIOs, which can be reformed subject to a vote of 75 per cent of the members, subject to Charity Commission consent.¹¹ In this analysis, the point at which a charity adopts a new constitution is called the ‘scheme stage’. The Charity Commission must consent to the new scheme before it becomes effective.¹² The same consent criteria, a list of guiding factors which the Charity Commission decision-maker must account for in deciding whether or not to permit the constitutional reform, applies to both incorporated charities and trusts, subject only to very minor variations in language. That the same criteria apply across the types of entity is integral to the logic of the legislation. The goal of the Law Commission’s reform was to bring in a unifying principle across incorporated and unincorporated charities. The purposes of both are amendable, subject to a vote and Charity Commission consent.

The criteria which govern the Charity Commission in deciding whether to consent to the scheme of arrangement are discretionary in operation. They can be understood as a ‘scrutiny tool’ or a ‘check list’ which informs the process. They require regard to the original purposes; the desirability of similarity, so far as reasonably practicable, between the original constitution and the amended version; and the need for the new purposes to be suitable and effective in current social and economic circumstances.¹³

The discretionary character of the consent criteria can be illustrated by the fact that they will sometimes, although not always, lead in opposing directions. So for example, where the founder of an art gallery imposes a restriction on new purchases of art,¹⁴ and in consequence of the niche character of the collection, that gallery receives only a modest number of yearly visitors, the criteria will push in varying directions if the trustees vote to remove the restriction. The decision-maker might say that artistic taste has changed, and the gallery would benefit from increased footfall, so current social and economic circumstances push towards consenting to the vote. At the same time, the decision-maker might say that the desirability of similarity with the original purposes weighs towards rejecting the vote. In such circumstances, the decision-maker is able to choose the priority of the criteria.

These criteria, now used to guide consent for the alteration of incorporated charities and trusts, are not an entirely new creation of the draftsperson. Similar, although not identical criteria, already existed in the trusts context.¹⁵ They were used in drawing up new trust constitutions (a routine centralised function of the Charity Commission in the pre-Charities Act 2022 system). They remain on the statute book and can still be applied where a scheme is imposed on trustees involuntarily without their vote. Owing to the similarity of statutory language, interpretative authority will be relevant to the new consent power. It is clear they do not allow for a disregarding of the purposes of the original trust,¹⁶ and also that the criteria should not be considered in isolation from each other.¹⁷ The original purposes will continue to have a gravitational pull. Yet it is also clear that, subject to that gravitational pull, their application is often broadly discretionary, with Lewison LJ stating in Zedra Fiduciary Services UK (Ltd) v Attorney General that ‘[t]here is no necessary hierarchy as between those three matters … the important point is that it is a value judgment for the court itself (or the Charity Commission) to make … ’.¹⁸

Another reason that the Charity Commission decision-maker often has a discretion in the aligned consent process is that she is not in fact bound to follow the logic of the criteria in any given case. Instead, she must only ‘have regard’ to them. So long as they are explicitly considered within the process, and so long as the decision-maker follows the ordinary rules of natural justice, she is, on the plain wording of the statute, entitled to set the scrutiny criteria aside. It might be thought that acknowledging the discretionary nature of the consent-giving process also leads to the view that the reform in the Charities Act 2022 will have no substantive effect. It is in the nature of discretionary processes that decisions will be made on a case-by-case basis. However, through assessment of the new legislative framework it can be seen that trust reform has become easier, and incorporated reform harder.

In the incorporated context, prior to the Charities Act 2022, the Charity Commission took a relaxed view towards consent, reflecting a principle of incorporated member control.¹⁹ This flows from and connects with the wider company law principle that members have a high degree of control over the incorporated organisation.²⁰ The Charity Commission never published specific public guidance on its approach to the reform of CIOs, but in its published operational guidance to its administrative staff, it details its approach in relation to charitable companies limited by guarantee.²¹ As the two forms of incorporated organisation are very similar, it is reasonable to assume that, under the old law, the Charity Commission took an equally relaxed approach to CIOs, so that consent was readily forthcoming in most cases.

Under the pre-Charities Act 2022 law, one Charity Commission requirement was that the incorporated organisation must remain charitable even after the alteration. This is both a very low bar, and also reflects charity law principles that funds dedicated to charity cannot be wrested away. Another criterion was that the proposed reform must be reasonable. Under this head, the directors’ decision-making process was assessed, so the Charity Commission was alive to questions such as whether or not the directors’ plans were genuinely workable; whether the impact on members and the beneficial class had been thought through. Another criterion was whether or not the proposed alteration was ‘broadly consistent’ with what the charity was set up to do, taking account of modern social and economic conditions. Even while the Charity Commission still had a scope to refuse incorporated amendments, none of these criteria could have been understood as stringent or seriously inhibiting constitutional reform.

The new statutory criteria, although admittedly discretionary and flexible in themselves, represent a hardening of consent process for incorporated charities. In some cases, they will make reform more difficult. The Charity Commission, which must provide a large number of consents on a yearly basis, has little administrative incentive to adopt a hard-line policy approach, leading to increased workload and potential conflict with trustees. Yet, were it so minded, perhaps in circumstances of sustained negative publicity or a local campaign, the Charity Commission now has strengthened procedural grounds to deny consent.

This can be worked through by reference to a hypothetical example. If trustees of an incorporated community theatre sought to disband their troop and, instead of performing plays, made grants directly to other theatre groups, under the old approach the Charity Commission would have assessed the trustee request primarily by reference to reasonableness, broad consistency with the original constitution, and mindful of the fact that the new scheme was charitable. It seems likely, applying these criteria, that the reform would be permitted. By contrast under the new law, should it wish to do so, the Charity Commission could make a stronger case that the charity should not be permitted to stop performing plays. As has already been seen, the decision-maker is now explicitly directed to have regard to the original purposes, and she is also explicitly directed to treat it as desirable that the new purposes are similar to the old. This means that she has a new tool kit which makes denying consent more readily defensible. She might say, for example, that the original purpose of the theatre company was to perform plays, and also, by reference to the statutory language, she could reasonably claim that it is ‘undesirable’ that the original purpose might be departed from.

This ‘hardening’ of the amendment process for incorporated charities should not, however, be overdone. CIO members are already subject to a duty of good faith in the exercise of their powers which might constrain them in the process of object amendment.²² Further, companies limited by guarantee are already subject to additional possible protection from reform. Minority members might potentially turn to the unfair prejudice provisions in section 994 of the Companies Act 2006.²³ In England and Wales, there has been no judicial consideration of the point and so the operation of section 994 to the charitable company limited by guarantee is admittedly obscure. However, it is available on a plain reading of the statute. So, for example, a minority member might seek to prevent, ‘any, or any specified, alterations in [the company] articles,’²⁴ having shown that the company affairs have been conducted in such a way as to be unfairly prejudicial to the interests of at least himself.²⁵

The other side of the aligning movement applies to charitable trusts. The impact is more directly apparent as the relaxation of the law is plain on the face of the new statute. Again, it is important to note that this is a part of a direction of travel rather than a sudden revolution without precedent. Significantly, even before the Charities Act 2022, there was in a place a relaxed procedure for small trusts with an income of less than £10,000 in the last financial year, which did not require positive Charity Commission consent.²⁶ By a vote of two-thirds of the trustees, the ordinary statutory cy-près procedure could be by-passed.²⁷ This was possible if the trustees considered the alteration to be expedient in the interests of the charity and, to the extent reasonably practicable, the new purposes consisted of or included purposes which were similar to the old.²⁸ This light-touch procedure, was significant for parish and historical charities, whose community-based and amateur trustees might be thought unlikely to ever make a formal application to the Charity Commission. That body merely had to be notified of the change.²⁹ The procedure has been removed by the 2022 reforms; the uniform process in the legislation now applies to large and small charities alike.³⁰

In the context of an assessment of the aligning movement, the position of small charities might now be considered a special case. Insofar as their trustees must gain positive Charity Commission consent after their vote, the Charities Act 2022 has added a limited new inhibition on change. But for the more significant trusts, reform has unambiguously become easier in consequence of the aligning reforms. Under the Charities Act 1960,³¹ in England, it was necessary for certain ‘grounds’ to be satisfied before reform of charitable trusts was permissible. Some of those grounds were difficult to meet, reflecting the former common law standard that trusts must have become impracticable or impossible in order to be amenable to reform. Yet other grounds in the pre-Charities Act 2022 framework were easier to satisfy. So, under the post Charities Act 1960 law, reform was permissible if the trust had ceased to provide a suitable and effective method of using the property.³² Another ground allowed reform if the trust could not be carried out according to the directions given.³³ These more expansive grounds, in consequence of express statutory wording, could only be relied upon after attention to the spirit of the donor,³⁴ albeit that her spirit was also weighed against social and economic circumstances prevailing at the time of the proposed alteration.³⁵

The more relaxed grounds, in the pre-Charities Act 2022 framework for larger trusts, particularly through the term ‘spirit of the gift’, directed scheme-maker attention towards the intention of the donor. Removing that requirement necessarily also removes a potential ‘entry barrier’ to reform in circumstances where the donor had a narrow or limited spirit. Donors’ original plans are now less well protected. It means one less procedural step to trust alteration; a legal friction has been removed.³⁶ In consequence of the Charities Act 2022, all charities, even those where the original constitution is entirely functional and operating as the founder intended, can prima facie be modified after a vote of the trustees on the basis of expediency. Under the new law in England, alteration of a charitable trust can be attempted by the trustees for the simple reason that they believe it would be expedient in the interests of the charity to do so. This is a low bar, requiring little more than trustee good faith combined with a belief that reform would be beneficial

Now that it is no longer necessary for the trustees, of larger trusts, to pass through a ‘grounds stage’, prior to the ‘scheme stage’, trust reform has been made easier in England. There has been an aligning movement, taking place via a series of legislative reforms and culminating in the Charities Act 2022. On the one hand, it has become potentially harder to modify the purposes of an incorporated charity. On the other hand, it has become easier for trustees of larger trusts to modify trust purposes.

3. AUSTRALIA’S MODEL OF CONSTITUTIONAL REFORM

Despite statutory replacement or enhancement of the common law rules, reform of charitable trust purposes remains available in only narrow circumstances. In some instances, the trust deed might contain an amendment clause permitting variation of the objects by the trustees,³⁷ though this is unlikely to be common, especially in older trusts. There is also a question of construction of the breadth of the variation power, with some authorities suggesting that variation powers may not be construed to permit changes that would alter the substratum of a trust, likely constraining the extent to which charitable purposes can be rendered dissimilar to the originally stated purpose.³⁸ For instance, in Re Dyer,³⁹ a charitable trust was created for the purpose of ‘founding a permanent fund for establishing and maintaining a metropolitan permanent orchestra in and for the said State of Victoria’. The trust indenture provided that the trust founder could vary ‘all or any part of the trusts’ by deed. Other donations not forthcoming, the trust funds proved insufficient to establish an orchestra and so the founder sought to vary the purpose to be one for ‘the advancement of music in the State of Victoria’ and ‘the promotion of musical education, study and practice in the State of Victoria’. The proposed variation was held to be too far outside the original purpose to be permitted by the variation clause.⁴⁰ More recent decisions suggest some liberalisation,⁴¹ although the risk remains. The applicability of trust deed amendment powers is broadly similar in England and Wales,⁴² but the importance of such amendment powers is emphasised in relation to Australia, given the lack of broad statutory powers, such as those found in England and Wales.

Even where statutorily expanded in Australia, cy-près schemes are generally only available on restricted grounds, with the key extended grounds being, first, where it is ‘impossible, impracticable or inexpedient’⁴³ to carry out a charitable purpose, or second, where the purposes have ‘ceased to provide a suitable and effective method of using the trust property’ having regard to the ‘spirit of the trust’ or ‘appropriate considerations’.⁴⁴ The second, cessation ground, is similarly worded to the Charities Act 2011 section 62(1)(e)(iii) ground in England and Wales that is set to be by-passed by the new trustee voting procedure in the Charities Act 2022. Changed social and economic conditions and changes in public policy have been held to be relevant in demonstrating that a particular purpose is inexpedient,⁴⁵ or that it no longer provides a suitable and effective method for using the trust property.⁴⁶ Nevertheless, the statutorily expanded provisions do not apply merely because an amended purpose would be more expedient or would provide a more suitable or effective method.⁴⁷

In addition, whether by explicit legislative requirement or conservative construction of the cy-près provisions, Australian courts typically require changes to retain a degree of similarity with the original purpose.⁴⁸ The legislation in New South Wales, Victoria and Queensland refers to property being applied ‘cy-près’,⁴⁹ which has been interpreted as continuing the general law requirement that a scheme apply property for purposes as near as possible to the original purposes.⁵⁰ To similar effect, in Western Australia, the legislation refers to the court or Attorney-general applying property to ‘some other charitable purpose … that is as close as possible to the original purpose’.⁵¹ South Australia and Tasmania require that before approving a scheme, the court (or Attorney-General) must be satisfied that the scheme ‘accords’ ‘as far as reasonably practicable’ ‘with the spirit of the [trust/original gift]’.⁵² As this means ‘the basic intention’ or substance underlying the creation of the trust or the making of a gift,⁵³ similarity with a higher level of abstraction-understanding of the original purpose, is expressly required. Returning to the theatre example discussed in relation to England and Wales, advancing culture through supporting plays (directly or indirectly) would be the higher level purpose. In the Australian territories where general law cy-près principles apply, the court’s jurisdiction is to establish a scheme for a purpose that is as near as possible (hence ‘cy-près’) to the original charitable purpose.⁵⁴

Further, obtaining a cy-près scheme requires obtaining the approval of the relevant Supreme Court, or, in limited circumstances in some jurisdictions, of the relevant Attorney-General.⁵⁵ Even then, the Attorney-General’s role is dissimilar from the English Charity Commission’s post-2022 reform role because the Attorney-General only has approval authority in very limited conditions, primarily when the charitable trust is ‘small’. Further, unlike England and Wales, when the Attorney-General (or the court) considers whether to approve a scheme, they have limited discretion, because the cy-près legislation or general law principles require that the scheme must meet similarity requirements.⁵⁶ Unlike the position in England and Wales, these are not mere factors to which the Attorney-General or the court must have regard.

In contrast, for the common forms of incorporated charity, amendment powers automatically apply under statutory provisions whose operation cannot be excluded by the charity’s constitution, though it may be possible to add extra conditions. Such amendment powers exist for associations incorporated under Australian state and territory incorporation legislation,⁵⁷ companies limited by guarantee,⁵⁸ co-operatives⁵⁹ and First Nations corporations,⁶⁰ permitting variation of the charitable objects in the constitution by special resolution, which typically means 75 per cent or more of the members who vote on the resolution. While amendments must generally be lodged with corporate regulators and,⁶¹ in some cases approved,⁶² approval, where required, is typically based on limited matters that do not generally go to the merits of the alteration, but rather to matters such as whether amended objects render the association a for-profit entity or extend beyond the legislatively permitted range of objects,⁶³ or whether constitutional variations continue to satisfy internal governance requirements.⁶⁴ In several instances, approval grounds are not expressly stated.⁶⁵ In contrast to trust reform and the position in England and Wales, there are no similarity considerations.

Australia has a federal charities regulator, akin to the English Charity Commission, in the form of the Australian Charities and Not-for-profits Commission (ACNC). Charities are not formally required to register with the ACNC,⁶⁶ but most economically material charities do so, because registration is a pre-cursor to accessing federal tax concessions, as well as providing expressive state endorsement through entry on a public register of charities.⁶⁷ While the ACNC must be notified of changes to constitutional objects, there is no approval requirement.⁶⁸

The chief constraints on constitutional amendment by incorporated charities arise from statutory and general law principles that seek to protect minority members from oppression by the majority, such as might arise from changes to objects that fall outside the members’ common understanding of the corporation’s purpose. We examine those constraints in more detail for Australia than England and Wales, as merits-based statutory consent requirements do not apply in Australia. Winding up cases on the just and equitable ground suggest that the ground may be made out by a failure to comply with a common understanding of the members as to the purposes and activities to be pursued by the company, sometimes known as a ‘failure of substratum’.⁶⁹ Some oppression cases also suggest that it may be unfairly prejudicial to or contrary to the interests of the members as a whole to act contrary to a common understanding held by the members as to how the company will be managed.⁷⁰ The incorporation legislation noted above typically provides for winding up on the ground that it is ‘just and equitable’⁷¹ and, sometimes, also contains oppression provisions.⁷² Some associations incorporation legislation also specifically provides for winding up on the ground that a charity is engaging in activities inconsistent with, or outside the scope of, the charity’s objects.⁷³ In Australia, a particular set of equitable principles, built on fraud on the minority principles, also applies at general law to constitutional amendments. The equitable principles require that where there is an amendment that involves a conflict of interests between (majority and minority) members, then the amendment cannot be ultra vires or oppressive of the minority shareholders.⁷⁴

These constraints could potentially prevent a majority amending the charitable objects stated in a constitution.⁷⁵ For instance, in the for-profit case of Re Tivoli Freeholds Ltd, the main objects of the company were construed as being the conduct of an entertainment business and acquiring land on which theatres were to be built. This reflected the common understanding of the members. However, after a new owner gained majority control, there was a de facto change to an object of corporate raiding: purchasing shares in companies whose shares were undervalued compared to the company’s net assets.⁷⁶ Due to the change from the common understanding, the just and equitable winding-up ground applied.⁷⁷ Turning to oppression, Szencorp Pty Ltd v Clean Energy Council Ltd⁷⁸ involved a not-for-profit company limited by guarantee whose object was to act as a representative for the sustainable energy sector. Szencorp claimed oppression arguing that the Clean Energy Council had been run by the directors in a way that failed to carry out its stated objects. Goldberg J declined to make a finding, partly because most management failures had been rectified, but noted that conduct may be oppressive where ‘a company is formed for the purpose of undertaking particular activities but the directors and management disregard those activities and direct the company into different commercial areas’.⁷⁹

Relief has been denied in some demutualisation cases involving large membership non-profit companies that convert to for-profit companies.⁸⁰ However, in the context of charitable corporations which set out their charitable objects in their constitutions, there is likely to be less trouble establishing a basis for a common understanding, than distinguishing between distribution of profits and provision of reduced-price services in the case of mutual insurance companies. Oppression is also a greater risk where constitutional amendment occurs by a mere vote of the members rather than court-supervised statutory scheme of arrangement provisions.⁸¹

If there is unanimous member agreement, few limits remain. It is possible that a corporate regulator could seek a winding-up order in the public interest,⁸² on the basis that it is necessary to maintain public confidence that donated funds will be applied to purposes sufficiently similar to those existing at the time that gifts were made, or at least to charitable purposes.⁸³ The potential availability of a winding-up order might in some circumstances also provide a basis for a corporate regulator or the ACNC to assert a breach of directors’ duties or charity governance standards in seeking a change that would lead to such a drastic result.⁸⁴ This could in turn open up the possibility of injunctive relief to stop a resolution from being put to members in the first place, as putting that resolution to members would potentially amount to a breach of duty.

4. COMMONALITIES AND DIFFERENCES

A. Level of Administrator Involvement

In the context of charitable trusts, Australia relies more heavily on decision-making by the courts as to change of purpose. That is because trustees typically need to apply for a cy-près scheme to amend the trust purposes and, generally, this requires the approval of the relevant Supreme Court, not the executive (in the form of an Attorney-General or Charity Commission). As noted above, in only five of the eight Australian jurisdictions (New South Wales, Western Australia, South Australia, Tasmania and Victoria) is the Attorney-General authorised to approve schemes and even where this is the case, the role is very confined.

In contrast, England creates a significant space for a body forming part of the executive, the Charity Commission, to make decisions about changes of charitable purpose. Unlike the courts, the Charity Commission can bring to that decision-making role its expertise in the charity sector and its understanding of government policy relevant to the charity sector.⁸⁵ This raises opportunities for the Charity Commission to support more effective charitable projects. While it also raises an increased risk of state ‘co-optation’ of charity assets to fund government-selected policies,⁸⁶ that risk seems low as the Charity Commission is relatively independent of ministerial direction.⁸⁷

Turning to incorporated charities, Australian jurisdictions typically feature minimal involvement by the executive or the courts in approving changes of purpose. That is because, approval is not typically required and, where it is, the approval is generally based on limited matters that do not go to the merits of the alteration. Administrators, in the form of corporate regulators or the ACNC, are only likely to be able to act to prevent a change where that change is drastically dissimilar from an existing purpose, or might render the entity a for-profit. Thus, there is again no material role for a body forming part of the executive with in-depth knowledge of the sector and government policy. This contrasts with the pre-Charities Act 2022 formal role for the English Charity Commission (since Charity Commission consent is mandated), but corresponds to a degree with the way that formal role was put into practice. That is because, as noted above, the Charity Commission was not demanding in assessing changes to corporate objects, focussing on whether the entity remained charitable and whether the proposed alteration was generally consistent with its original purpose. Nevertheless, even before the Charities Act 2022 reforms, the Charity Commission looked further into the merits than Australian regulators, by assessing the reasonableness of proposed changes. The Charities Act 2022 reforms now require substantive analysis of constitutional changes, by, requiring regard to whether the new purposes are suitable and effective in current social and economic circumstances.

B. Comparing and Contrasting Grounds Permitting Reform & Scheme Purpose Requirements

The process of constitutional reform can be understood as involving an initial ‘grounds’ stage at which reform is permitted. This is followed by a second ‘scheme stage’ at which the new purposes of the constitution are decided upon. At the ‘grounds’ stage, it has been seen that, in England, a new unified test applies to both incorporated charities and trusts. Trustees or members can vote for reform of the constitution, if it is expedient in the interests of the charity to do so. The reform will be effective subject to Charity Commission consent.

By contrast, in Australia in relation to trust reform, even in those states which have expanded the grounds beyond the traditional common law model, no jurisdiction allows trust reform on the basis of expediency. In relation to the reform of incorporated charities, the regime in Australia remains more liberal than in England. Reform is straightforwardly permissible by a vote of the members. There is generally no administrative monitoring of that process.

At the ‘scheme’ stage, England and Australia have also parted ways, at least to some degree. In England there is no ‘cy-près’ requirement that the altered purposes should be ‘as near as possible’ to the old ones. Instead, there is a discretionary administrative process, albeit one subject to statutory guidelines that retain a connection with similarity requirements. By contrast, in Australia, the courts have maintained a relatively conservative approach for charitable trusts, requiring that the new purposes be reasonably close to the old. Of course, as noted by Mulheron, commenting on earlier forms of the cy-près provisions, we should be cautious not to overstate the degree of difference for charitable trusts.⁸⁸ The loosening of similarity requirements in England and Wales is one of degree, with the practical differences potentially somewhat muted by judicial conservatism and Charity Commission practice.

A larger difference arises from the fact that the members of Australian incorporated charities can change the charitable purposes without any explicit need to consider similarity to the old purposes. However, in practice, oppression or winding-up provisions may be employed where a change very drastically alters the purpose. Thus the position for Australian incorporated charities is probably a little closer to that in England than it otherwise appears to be.

5. SHOULD AUSTRALIA FOLLOW ENGLAND’S PATH?

The English reform path of gradually liberalising the amendment of charitable trusts and seeking greater alignment between trusts and corporations will have a range of effects. Australian decision-makers need to understand the nature of these effects to determine whether to follow suit. Significantly, the English reforms provide greater alignment between the position for corporations and charitable trusts. Thus, despite the Law Commission’s indirect acknowledgment that founders might wish to constrain alterations to trust constitutions, the direction of reform in England and Wales enables greater alteration, albeit alterations must be carried out with some regard to similarity of purpose requirements.⁸⁹ Greater ease of alteration, even with similarity requirements in place, might be expected to disincentivise some donors from giving to charitable trusts due to decreased protection for donor intent. However, other donors may be incentivised to give more to charitable trusts, due to the potential for more effective use of their donation over time, or to give to incorporated charities, due to the increased protection for donor intent. How this will balance out will depend on factors such as whether there are other strong reasons for donors to prefer one type of charity vehicle over the other and whether donors who currently enjoy strong plan protection will be substituted by donors who previously enjoyed very weak plan protection, now being attracted by moderate plan protection.

However, what can be said is that the English reforms reduce the range of standardised choices available to donors. Previously, donors wanting strong plan protection could select a charitable trust, while those wanting weak plan protection could opt for an incorporated charity. Now, as the statute cannot be ousted on a plain reading, only moderate plan protection is available off-the-shelf. A material reduction in choice might be expected to either reduce the overall level of donations or lead to increased agency costs as donors attempt to impose bespoke arrangements to achieve greater plan protection.⁹⁰ Such a reduction in choice might also be expected to detract from the autonomy of donors⁹¹ and, potentially, to reduce the degree of pluralism⁹² in carrying out charitable projects by enabling greater homogenisation based on societal views of what is ‘expedient’. However, the analysis is complicated by the fact that plan protection itself reduces the autonomy of the trustees or directors charged with carrying out the charitable purpose, which, over time, can result in social costs and inefficiency.⁹³ Reducing the choices of these charity responsible persons might also impede pluralism if donors, as a group, are likely to adopt less diverse approaches to charitable projects than charity trustees or directors, for instance due to donors being a small set of the very wealthy.⁹⁴

A second and countervailing consideration is that there can be material practical impediments to trustees accessing cy-près relief, because court-based cy-près processes can often be costly and complicated.⁹⁵ Granting power to an administrator, as has happened with the Charity Commission in England can reduce these costs and complications, albeit it has the potential to reduce transparency if the reasons for decisions are not publicly available, at least in de-identified form, as is the case for court decisions. Further, widening the grounds, but retaining some restrictions on when relief will be granted, as in England, could also potentially have an impact on the flexible response of charities to changing social and economic circumstances, which could help to maximise the benefits provided by charities. To be sure, in an aligned framework, incorporated charities would have additional conditions to meet, which would increase administrative costs, but still while retaining some flexibility.

A third consideration is whether it is desirable for trusts law and corporate law to converge in the manner of the English reforms. This aligning approach mirrors the stance taken more broadly in the United States in the American Law Institute’s Restatement of the Law: Charitable Nonprofit Organizations. It also reflects uncertainty that exists in both England and Wales and Australia as to whether cy-près requirements apply on top of corporate reform procedures.⁹⁶ That is, there is debate as to whether an incorporated charity should be treated in some circumstances as if it holds its general property on charitable trust or subject to duties analogous to those of a charity trustee.

On one view, the attempted convergence can be seen as a way of aiding clarity within charity law as intended by the Law Commission and of providing a unified and hence simplified response to questions about the extent to which (statutory) cy-près processes must be adopted for both charitable trusts and corporations.⁹⁷ However, the attempted convergence also causes uncertainty. It does not address the broader suite of questions that arise from assertions that incorporated charities might sometimes hold their property under trustee-like obligations, such as whether creditors should be able to call on the property in the event of insolvency, or whether corporation directors’ duties are affected by trust-like obligations.⁹⁸ Another way of expressing this concern is to say that the attempted convergence does not aid coherence, at the doctrinal level, within trusts law or corporate law as distinct bodies of law. There are real differences between incorporated charities (whether viewed as a legal person or as a form of association) and charitable trusts (which involve obligations arising from the holding of property). We acknowledge the debate as to whether trust law is properly seen as part of the law of property or the law of obligations,⁹⁹ and accept that it involves a mixture of both proprietary and obligational elements.¹⁰⁰ The existence of such a mixture highlights similarities with company law and it is true that some scholars consider that both corporations law and trusts law form a body of organisational law that deals with governance (concerning agency costs and fiduciary principles and drawing on the law of obligations) as well as asset partitioning (drawing on the law of property).¹⁰¹

However, a key feature of trusts law, at least in the case of an express trust, is that the trust is effectively an expression of the settlor’s intention to create a trust.¹⁰² The focus is on the settlor’s intention (determined objectively) in dealing with property over which they have power, provided they sufficiently clearly identify that property and the persons or purposes to which it is to be applied.¹⁰³

These ‘three certainties’ (as to intention, property and persons/purposes) are typically practically entwined.¹⁰⁴ The selection of property to apply to selected objects is part of the manifestation of the settlor’s intention.¹⁰⁵ In a charity context, this focus on the settlor’s intention in dealing with their own property has been repeatedly expressed in the context of cy-près proceedings.¹⁰⁶ For example, in relation to the testamentary charitable trust in Re Weir Hospital:¹⁰⁷

The first duty of the Court is to construe the will, and to give effect to the charitable directions of the founder, assuming them not to be open to objection on the ground of public policy. The Court does not consider whether those directions are wise or whether a more generally beneficial application of the testator's property might not be found.¹⁰⁸

The focus, for express trusts, on the settlor’s intention in relation to property emphasises the role of trust law in supporting the settlor’s freedom of disposition of property.¹⁰⁹ This can be contrasted with incorporated charities, where the legal form is more suited to supporting freedom of association for joint projects to hold and dispose of property.¹¹⁰ That is because, while one-member companies are permitted in many cases,¹¹¹ company limited by guarantee, CIO and incorporated association legislation expressly provides for the concept of members, along with standard rights for members such as to elect directors and amend the corporate constitution.

This distinction between the charitable trust and charitable corporation institutional forms is emphasised by judicial statements in Australia¹¹² and in England and Wales¹¹³ that build on Slade J’s discussion in Liverpool and District Hospital for Diseases of the Heart v A-G,¹¹⁴ about the importance of cohesively applying incorporation legislation provisions and charity regulation legislation, along with the general law.¹¹⁵ That emphasis suggests that the court’s jurisdiction with respect to charities should not undermine the operation of the incorporation legislation.¹¹⁶ For the question of whether an incorporated charity must apply for a cy-près scheme to amend its purposes, this approach would then emphasise the corporate winding-up, oppression and injunctive relief procedures discussed above, rather than broadly construing charitable trusts law as applying to incorporated charities.

Finally, there is a practical difficulty with Australia following the model from England and Wales. There is not a clear regulator that can be provided equivalent powers to the Charity Commission. Australia has a federal charities regulator, the ACNC. However, under Australia’s federal system of government, the Commonwealth only has limited heads of power, which do not include a general power relating to charities or to trusts. There are powers relating to corporations, tax and the territories, which have been, somewhat controversially, relied upon to maintain the current regulatory arrangements.¹¹⁷ Outside the territories though, regulating the internal amendment processes for trusts and most incorporated and unincorporated associations, as well as cooperatives, raises a significant risk of extending beyond existing heads of power. That leaves state Attorneys-General as the other obvious choice. Many state Attorneys-General have already been given limited power to approve cy-près schemes for small charitable trusts. States could extend these powers. However, the structural independence from government decision-making of the Charity Commission would not exist for an Attorney-General. Indeed, even in respect of more limited decision-making discretion by Attorneys-General, there are examples of government policy interference.¹¹⁸

6. CONCLUSION

The gradual process of English reform, culminating in the Charities Act 2022, will have a far-reaching effect on constitutional reform of charitable trusts and ordinary incorporated charities. It has been seen in this analysis that the reforms make trusts easier to alter and, at least in circumstances where the Charity Commission chooses to take a restrictive stance, they will potentially make incorporated charities harder to alter. Australia, by contrast, currently maintains the traditional distinction between the two types of entity, so that the alteration of trusts is restricted but the alteration of ordinary incorporated charities, outside of oppression cases or changes that bear no similarity to the original purposes, remains a matter of straightforward member control.

Australian reformers, or those of other common law jurisdictions, should think carefully before following England’s path as the reforms are not solely technical and raise a number of complex theoretical and policy issues. Alignment of incorporated charities and trusts, insofar as it makes trust reform easier to achieve, reduces the ability of donors to protect their charitable plans. This interfaces with questions of donor autonomy. Related to this, are issues concerning the traditionally differing functions of charitable trusts and incorporated charities. Whereas trusts have traditionally been creatures reflecting donor intention in relation to property, incorporated entities have long been viewed through an associational lens as collectives of members. The aligning reforms in England have furthered the erasure of this distinction, and in consequence, Australian reformers must assess whether there is advantage in maintaining a legal framework in which different legal forms have distinct and separate functions. There are also issues of procedure and cost to consider, as the system in England, in contrast to Australia, is administrative rather than court-based, so permitting relatively cheap and efficient access to reform processes, though this may also result in less transparency. No such framework exists in Australia. In that country, due to the fact that constitutional reform decisions for a range of legal forms take place at state level, the national regulator does not have as comprehensive an administrative role to play.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author(s).

Notes

1 For a restrictive judicial approach see e.g. Re Weir Hospital [1910] 2 Ch 124, 138; A-G (NSW) v Grant (1976) 135 CLR 587, 600–3 (Gibbs J, Stephen, Mason and Jacobs JJ agreeing); A-G (NSW) v Fulham [2002] NSWSC 629, [52]–[54] (Bryson J); NSW Masonic Property Trust v A-G (NSW) [2009] NSWSC 1301 [123]–[161] (Hall J). See also A-G v Zedra Fiduciary Services (UK) Ltd [2022] EWHC 102, [11].

2 Cases rarely came to court, but see Re Cyclists’ Touring Club [1907] 1 Ch 269; Dominion Student Hall Trust v A-G [1947] Ch 183. For discussion contrasting the difficulty of amending a charitable trust, with the ease of amending the objects of the charitable incorporated trustee, see RSL Veterans’ Retirement Villages Ltd v NSW Minister for Lands [2006] NSWSC 1161, [32]–[37].

3 For these jurisdictions in comparison, see R Mulheron, The Modern Cy-près Doctrine (UCL 2006) 91.

4 Technical Issues in Charity Law Law Com No 375 (2017).

5 Technical Issues in Charity Law: Supplementary Consultation Law Com Consultation Paper (2016), [2.28].

6 See, e.g. HG Mullen, SG Maurice and DB Parker, Tudor on Charities (Sweet & Maxwell, 6th edn 1967). But compare, P Luxton, The Law of Charities (OUP 2000).

7 Companies Act 2006, s 283; Charities Act 2011, s 224(2); Charities Act 2011, s 62.

8 In the English context, ‘incorporated charity’ refers to companies limited by guarantee and CIOs.

9 Charities Act 2022, s 3; inserting Charities Act 2011, s280A. If the trust has members, they must also vote by a 75% majority but the trustees themselves can pass the change by a majority (Charities Act 2022, s280A(b)).

10 Even if the statute were given a purposive reading, its ‘remedy’ is to increase trustee flexibility. See Heydon’s Case (1584) 3 Co Rep 7a, 7b. Gift-overs can also be removed: J Picton, ‘The Charities Act 2022 and Its Dissuasive Effect on Donors’ (2023) 86 Modern Law Review 1011, 1019.

11 Companies Act 2006, ss 21(1), 283; Charities Act 2011, s 224(2).

12 For incorporated charities, see especially: Companies Act 2006, ss 21(2), 31(4); Charities Act 2011 (UK) ss198, 226(2).

13 Charities Act 2022, ss 1,2 & 3; inserting new Charities Act 2011, ss 198(3), 226(2A), 280A(10).

14 See Heinrich Schweizer, ‘Settlor's Intent v Trustee's Will: The Barnes Foundation Case’ (2005) 29 Columbia Journal of Law & the Arts 63, 70.

15 Charities Act 2011, s 67(3). The relevant factors under the older procedure, are ‘the spirit of the gift’, ‘the desirability of securing that the property is applied for charitable purposes which are close to the original purposes’ and ‘the need for the relevant charity to have purposes which are suitable and effective in the light of current social and economic circumstances’.

16 Varsani v Jesani [1999] Ch 219, [24]; Zedra Fiduciary Services UK (Ltd) v Attorney General [2023] EWCA Civ 1332, [28]; White v Williams [2010] EWHC 940, [118].

17 Zedra, [57].

18 Zedra, [57].

19 Subject to the consent provisions in Companies Act 2006, s 21(2)(a); Charities Act 2011, ss 198(1), s 226.

20 Cyclists’ (n 2).

21 Charity Commission ‘OG 518’ (16 April 2013) <www.charitycommission.gov.uk/About_us/pogs/g505a001.aspx> accessed 27 August 2023.

22 Charities Act 2011, s 220. The general law doctrine of fraud on the minority might also potentially apply to restrict some amendments.

23 See discussion of oppression principles in Australia at nn 69 to 84.

24 Companies Act 2006, s 996(2)(d).

25 Companies Act 2006, s 994(1)(a). The derivative action is unlikely to be used in the context of a charitable company limited by guarantee in circumstances where there is Charity Commission oversight of fiduciary obligations. See, e.g. Mohamed v Abdelmamoud [2018] EWCA Civ 879, [35].

26 Charities Act 2011, s 277. The change took effect 60 days after notification of the Charity Commission.

27 Charities Act 2011, s 275(5).

28 Charities Act 2011, s 275(4).

29 Charities Act 2011, s 276.

30 Under the new Charities Act 2011, s 280A.

31 Charities Act 1960, s 13(1), re-enacted as Charities Act 1993, s 13(1) and subject to modification, Charities Act 2011, s 62(1).

32 Charities Act 2011, s 62(1)(e)(iii).

33 Charities Act 2011, s 62(1)(a)(ii).

34 The phrase ‘spirit of the gift’ is integral to Charities Act 2011, s62(1)(a)(ii). It is imported into Charities Act 2011, s62(1)(e)(iii) by virtue of Charities Act 2011, s62(2).

35 Charities Act 2011, s 62(2)(b).

36 Outside of the 2022 reform mechanisms, while the Charity Commission or court imposes a scheme on the trustees involuntarily, a Charities Act 2011, s62(1) ground must be established.

37 See, e.g. Robinson atf Trust Fund of the Fairfax Fellowships at Balliol College v Attorney General (NSW) [2022] NSWSC 996 [91]–[92] (Kunc J); Hibiscus Hospice Charitable Trust [2021] NZHC 279; G Dal Pont, Law of Charity (LexisNexis Butterworths, 3rd edn 2021) [14.17].

38 See especially Re Dyer (1935) VLR 273; Attorney-General (NSW) v Grant (1976) 135 CLR 587, 602–7. See also the discussion in the other cases cited at n 37.

39 (1935) VLR 273.

40 Ibid, 277–8. Reasoning approved on appeal: Re Dyer (n 38) (appeal judgment commencing at 282).

41 Robinson (n 28), [91]–[92] (Kunc J).

42 William Henderson, Jonathan Fowles, and Gregor Hogan, Tudor on Charities (Thomson Reuters, 11th edn 2022) [10-022]–[10-049]; Geraint Thomas, Thomas on Powers (OUP, 2nd edn 2012) [16.08]–[16.40].

43 Charitable Trusts Act 2022 (WA) s10(1); Variation of Trusts Act 1994 (Tas) s 5(2).

44 Charitable Trusts Act 1993 (NSW) s 9 (1). See also Trusts Act 1973 (Qld) s 105(1)(e)(iii); Trustee Act 1936 (SA) s 69B(1)(e)(iii); Variation of Trusts Act 1994 (Tas) s 5 (3)(e)(iii); Charities Act 1978 (Vic) s 2(1). Or other more limited specified circumstances, such as where ‘the amount available is inadequate to carry out’ the purpose, or where the property ‘is more than is necessary for the purpose’: see, e.g. Charitable Trusts Act 2022 (WA) s10(1).

45 Re Radich [2013] NZHC 2944 (the New Zealand provisions are similar to Western Australia).

46 See, e.g. Re Peirson Memorial Trust [1995] QSC 308; Cram Foundation v Corbett- Jones [2006] NSWSC 495, [46]–[47] (Brereton J).

47 Re Kean (2003) 86 SASR 449, [56], [68] (Besanko J); University of Adelaide v Attorney-General (SA) [2018] SASC 82, [8]–[9] (Stanley J); Robinson (n 28), [37]–[54] (Kunc J); Re McElroy Trust [2003] 2 NZLR 289, [11], [14] (Tipping J).

48 See, e.g. Dal Pont (n 28) [16.1]–[16.14].

49 Charitable Trusts Act 1993 (NSW) ss 9 (1), 12(1)(a); Trusts Act 1973 (Qld) s 105(1)(e)(iii); Charities Act 1978 (Vic) ss 2(1), 4(3).

50 See, e.g. Free Serbian Orthodox Church Diocese for Australia and New Zealand Property Trust v Dobrijevic (2017) 94 NSWLR 340, [315] (Court of Appeal).

51 Charitable Trusts Act 2022 (WA) s 10(2).

52 Trustee Act 1936 (SA) s 69B(6); Variation of Trusts Act 1994 (Tas) ss 6(3), 7(5).

53 Dal Pont (n 28) [16.11].

54 Ibid, [14.6], [15.70]–[15.74]; Phillips v Roberts [1975] 2 NSWLR 207, 214 (Samuels JA), 217 (Mahoney JA) (discussing the meaning of cy-près).

55 See, e.g. Dal Pont (n 28) [14.1]–[14.9], chap 15, chap 16. In some places, the Attorney-General has authority to approve cy-près schemes for small trusts. See, e.g. Charitable Trusts Act 1993 (NSW) ss 12, 14); Charitable Trusts Act 2022 (WA) s16; Trustee Act 1936 (SA) s 69B(3)(b); Variation of Trusts Act 1994 (Tas) s 7; Charities Act 1978 (Vic) s 4.

56 See nn 48 to 54. See also Charities Act 1978 (Vic) s 4(4). Mulheron, notes a tendency to ‘read down’ liberalising measures, such as in early Western Australian provisions: (n 3) 128–37.

57 Associations Incorporation Act 1991 (ACT) s 30; Associations Incorporation Act 1964 (Tas) s 18; Associations Incorporation Reform Act 2012 (Vic) s 50; Associations Incorporation Act 2015 (WA) ss 30, 33; Associations Incorporation Act 1981 (Qld) s 48(1); Associations Incorporation Act 2009 (NSW) s 10; Associations Incorporation Act 1985 (SA) s 24, Associations Act 2003 (NT) s 23 (no special resolution requirement).

58 Corporations Act 2001 (Cth) s 136.

59 Co-operatives (Adoption of National Law) Act 2012 (NSW), Appendix, ss 60, 61.

60 Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) subdiv 69-B.

61 See, e.g. Corporations Act 2001 (Cth) s 136(5); Associations Incorporation Act 1991 (ACT) s 30(2); Associations Incorporation Act 1964 (Tas) s 18(2); Associations Incorporation Act 1985 (SA) s 24(2); Associations Incorporation Act 2009 (NSW) s 10(1); Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 69-20(1); Co-operatives (Adoption of National Law) Act 2012 (NSW), Appendix, s 63; Associations Act 2003 (NT) s 23(1); Associations Incorporation Reform Act 2012 (Vic) s 50; Associations Incorporation Act 2015 (WA) s 30(3); Associations Incorporation Act 1981 (Qld) s 48(4).

62 See, e.g. Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 69-30; Co-operatives (Adoption of National Law) Act 2012 (NSW), Appendix, s 60; Associations Act 2003 (NT) s 23(5); Associations Incorporation Reform Act 2012 (Vic) s 50; Associations Incorporation Act 2015 (WA) s 33; Associations Incorporation Act 1981 (Qld) s 48(8); Associations Incorporation Act 2009 (NSW) s 12.

63 See, e.g. Associations Incorporation Reform Act 2012 (Vic) ss 7, 50; Associations Incorporation Act 2015 (WA) s 33; Co-operatives (Adoption of National Law) Act 2012 (NSW), Appendix, s 60.

64 See, eg, Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 69-30; Associations Incorporation Act 2009 (NSW) s 12.

65 See, e.g. Associations Act 2003 (NT) s 23(5); Associations Incorporation Act 1981 (Qld) s 48(8).

66 Australian Charities and Not-for-profits Commission Act 2012 (Cth) s 30-10.

67 Dal Pont (n 28) [1.21]–[1.22]; I Murray, ‘Regulating Charity in a Federated State: The Australian Perspective’ (2018) 9 (4) Nonprofit Policy Forum 1.

68 Australian Charities and Not-for-profits Commission Act 2012 (Cth) s 65-5(1)(d).

69 R Austin and I Ramsay, LexisNexis, Ford, Austin and Ramsay’s Principles of Corporations Law, [10.400.15] (last reviewed May 2023); Re Tivoli Freeholds Ltd [1972] VR 445 (VSC) 468–9 (Menhennit J). See also Strong v J Brough & Son (Strathfield) Pty Ltd (1991) 5 ACSR 296 (NSWSC) 299-301 (Young J).

70 See, Austin and Ramsay (n 69) [10.450.15], [10.450.21], [10.460.15] (last reviewed May 2023); Re Treadtel International Pty Ltd (No 2) [2016] NSWSC 791, [103] (Robb J); Mopeke Ptd Ltd v Airport Fine Foods Pty Ltd (2007) 61 ACSR 395.

71 Corporations Act, s 461(1)(k) (applied under Associations Incorporation Act 1964 (Tas) s 32 and Associations Act 2003 (NT) s 72); Associations Incorporation Act 2009 (NSW) s 63(1)(i); Associations Incorporation Act 1981 (Qld) s 91(i); Associations Incorporation Act 1985 (SA) s 41(3)(g); Associations Incorporation Reform Act 2012 (Vic) s 126(1)(g); Associations Incorporation Act 2015 (WA) sch 4 item 10. Cf Associations Incorporation Act 1991 (ACT) s 90(i) (‘just’); Co-operatives National Law, s 455(2)(h) (in the interests of members or creditors or the public); Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 526-5(n).

72 Corporations Act 2001 (Cth) pt 2F.1; Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) div 166; Associations Act 2003 (NT) s 109; Associations Incorporation Reform Act 2012 (Vic) s 68; Associations Incorporation Act 1985 (SA) s 61; Co-operatives National Law div 4. A number of jurisdictions also permit winding up on oppression grounds.

73 Associations Incorporation Act 1991 (ACT) s 90(g); Associations Incorporation Act 2009 (NSW) s 63(1)(e); Associations Incorporation Act 1981 (Qld) s 91(e); Associations Incorporation Reform Act 2012 (Vic) s 126(1)(f); Associations Incorporation Act 2015 (WA) sch 4 item 6.

74 Gambotto v WCP Ltd (1995) 182 CLR 432.

75 See also RT Langford, ‘Use of the Corporate Form for Public Benefit: Revitalisation of Australian Corporations Law’ (2020) 43 University of New South Wales Law Journal 997, 1002–4.

76 Tivoli (n 69) 475–6 (Menhennit J).

77 Ibid, 468–76 (Menhennit J).

78 (2009) 69 ACSR 365 (FCA) 379.

79 Ibid, [59]–[66] (Goldberg J). See also Australian Securities Commission v The Multiple Sclerosis Society of Tasmania (1993) 10 ACSR 489 (Tas SC), 514–15 (Zeeman J).

80 Re NRMA Ltd (2000) 33 ACSR 595 (NSWSC).

81 Ibid.

82 Corporations Act, s 461(1)(h) (applied under Associations Incorporation Act 1964 (Tas) s 32 and Associations Act 2003 (NT) s 72); Associations Incorporation Reform Act 2012 (Vic) s 127(2)(j); Co-operatives National Law, s 455(2)(h). See also. Associations Incorporation Act 1991 (ACT) s 90(i); Associations Incorporation Act 2009 (NSW) s 63(1)(h); Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) s 526-5(m). In jurisdictions that lack a public interest ground, it is possible that the just and equitable ground could be applied in these circumstances.

83 Australian Securities and Investments Commission v AS Nominees Ltd (1995) 62 FCR 504 (FCA) 532–3 (Finn J: investor confidence); ACNC Act, s 15-5(1).

84 See, e.g. I Murray and R Langford, ‘The Best Interests Duty and Corporate Charities: The Pursuit of Purpose’ (2021) 15 Journal of Equity 92, 106–9.

85 On administrative sectoral expertise and policy understanding, see, e.g. Lord Nathan and others, Report of the Committee on the Law and Practice relating to Charitable Trusts, Cmd 8710 (1952) 82–5; J Garton, ‘Justifying the Cy-près Doctrine’ (2007) 21 Trust Law International 134, 148–9.

86 As to the phenomenon of ‘co-optation’, see K Chan, The Public-Private Nature of Charity Law (Hart 2016) chap 6.

87 While the Secretary of State for Culture, Media and Sport appoints the Chair and other Commissioners, the Charity Commission cannot generally be directed or controlled by government ministers: Charities Act 2011 (UK) c 25, ss 13(1), 13(4), sch 1, 1(1).

88 See n 3.

89 For acknowledgment of this change and reliance on the similarity requirements to maintain respect for donor intent, see Technical Issues (n 6) [4.128].

90 As to costs associated with donor restrictions, see, e.g. R Colinvaux, ‘Strings are Attached: Shining a Spotlight on the Hidden Subsidy for Perpetual Donor Limits on Gifts’ (2023) 56 Loyola Law Rev (forthcoming).

91 By reducing their range of options below an ‘adequate’ range: J Raz, The Morality of Freedom (Clarendon Press 1986) 372–8.

92 As to pluralism, see, e.g. R Dahl, Dilemmas of Pluralist Democracy: Autonomy vs. Control (YUP 1982).

93 See, e.g. I Murray, Charity Law and Accumulation: Maintaining an Intergenerational Balance (CUP 2021), especially chap 8. See also J Picton, ‘Regulating Egoism in Perpetuity’ in J Picton and J Sigafoos (eds), Debates in Charity Law (Hart 2020) 53, 59–65.

94 As to the ways in which donor restrictions for plan protection can reduce pluralism, see, e.g. Colinvaux (n 90).

95 Taylor v Princess Margaret Hospital for Children Foundation Inc (2012) 42 WAR 259, [53] (Edelman J); Mulheron (n 3) 139–41.

96 Dal Pont (n 37) [17.69]–[17.70]; Jean Warburton, ‘Charitable Companies’ (1984) Conveyancer 112, 116–18. The practical impact of uncertainty is lessened in England and Wales where companies limited by guarantee and CIOs require regulator consent in addition to a resolution: see nn 9–12 and accompanying text.

97 As to whether incorporated charities hold their property on charitable trust and are thus subject to cy-près processes, see I Murray, M Webster and M Harding, ‘The Boundaries of the Trust in Australia: The Case of Charitable Corporations’ in YK Liew and M Tamaruya (eds), Asia-Pacific Trusts Law, Vol. 3: Boundaries in Context (Hart Publishing, forthcoming 2024).

98 Though provisions such as Charities Act 2011 (UK) ss 220 (for members) and 221 (for directors) go some way to answering the question.

99 W Swadling, ‘Property: General Principles’ in A Burrows (ed), English Private Law (OUP, 3rd edn 2013) [4.140] (partly because of the rights held on trust, which may be personal rather than proprietary; and partly due to the duties on trustees arising under the law of obligations); P Parkinson, ‘Reconceptualising the Express Trust’ (2002) 61(3) Cambridge Law Journal 657.

100 See, e.g. Swadling (n 99) [4.140]; R Valsan, ‘Rights Against Rights and Real Obligations’ in L Smith (ed), The Worlds of the Trust (CUP 2013) 481, 486–90. See also L Tucker, N Le Poidevin and J Brightwell, Lewin on Trusts (Thomson Reuters, 20th edn 2020) [1-006]–[1-008].

101 See, e.g. H Hansmann and R Kraakman, ‘The Essential Role of Organizational Law’ (2000) 110(3) Yale Law Journal 387; RH Sitkoff, ‘Trust Law as Fiduciary Governance Plus Asset Partitioning’ in L Smith (ed), The Worlds of the Trust (CUP 2013) 428.

102 See, e.g. Tucker, Le Poidevin and Brightwell (n 100) [1-033], [5-001]; D Alderson, ‘The Express Trust’s Nocturnal Cerberus: Some Observations on the Morality of Intention to Create an Express Trust’ (1988–1989) 9(4) Estates, Trusts & Pensions Journal 319, 331–9.

103 See, e.g. Tucker, Le Poidevin and Brightwell (n 100) [5-001]–[5-067], Thomson Reuters, Ford and Lee: The Law of Trusts (updated 7 February 2022) [2.010]; J Heydon and M Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis, 8th edn 2016) [5-01]–[5-30]; Kauter v Hilton (1953) 90 CLR 86, 97-99; Knight v Knight (1840) 3 Beav 148, 172–3 (Lord Langdale MR).

104 High Commissioner for Pakistan in the United Kingdom v Prince Muffakham Jah [2019] EWHC 2551 (Ch), [245] (Marcus Smith J). See also Mussoorie Bank Ltd v Raynor (1882) 7 App Cas 321, 331, which highlights that uncertainty as to subject matter will throw doubt on the existence of an intention to create a trust.

105 See, e.g. Attorney-General v Sands (1669) Hard 488, 494, 497 (Chief Baron Hale).

106 See, e.g. Mulheron (n 3) 87–9; Dal Pont (n 37) [6.6]; Chan (n 86) 33–4; I Murray, Charity Law and Accumulation: Maintaining an Intergenerational Balance (CUP 2021) 231–3. Compare Garton who suggests that the cy-près doctrine is more focussed on limiting freedom of disposition: ’Justifying’ (n 85) 134, 140–4.

107 [1910] 2 Ch 124 (CA). See also Attorney-General v Dedham School (1857) 23 Beav 350, 355 (Romilly MR). In Australia see Phillips v Roberts [1975] 2 NSWLR 207 (NSWCA), 210–12 (Hutley JA), 214 (Samuels JA), 217 (Mahoney JA); Trustees of the Christian Brothers in Western Australia (Inc) v Attorney-General [2006] WASC 191, [22]–[29] (Templeman J).

108 [1910] 2 Ch 124, 131 (Cozens-Hardy MR). See also [1910] 2 Ch 124, 134–5 (Farwell LJ), 140–1 (Kennedy LJ).

109 More accurately, trusts law makes various choices about how to balance settlor and donee competing interests in freedom of alienation of property: R Sitkoff, ‘Trusts and Estates: Implementing Freedom of Disposition’ (2014) 58(3) Saint Louis University Law Journal 643.

110 Although, competing freedoms to dispose of assets will potentially indirectly arise between donors and the incorporated charity: Mulheron (n 3) 16.

111 Although incorporated associations in Australia require more than one member: either expressly (Associations Incorporation Act 2015 (WA) s 4(b)) or by implication (GE Dal Pont, Law of Associations (LexisNexis 2018) [5.3]).

112 Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 3) [2023] NSWSC 238.

113 Lehtimäki v Cooper [2020] UKSC 33.

114 [1981] Ch 193 (Ch D), 211 (Slade J).

115 Grain Technology (n 112), [249], [334], [341], [361]–[363], [375]–[376], [417]–[418] (Parker J); Lehtimäki (n 113), [72]–[81], [166]–[173] (Lady Arden).

116 See, especially, Grain Technology (n 112) [360]–[363] (Parker J).

117 Along with the communications and external affairs powers: Revised Explanatory Memorandum, Australian Charities and Not-for-profits Commission Bill 2012 (Cth) [2.2]–[2.14]. See, e.g. N Aroney and M Turnour, ‘Charities are the New Constitutional Law Frontier’ (2017) 41(2) Melbourne University Law Review 446.

118 See, e.g. M Warren, Celebrity Fundraising, Human Generosity and Consumer Protection (Charity Law Association of Australia and New Zealand, Website, 5 July 2021) 23 <www.charitylawassociation.org>. In a US context, see, e.g. E Brody, ‘Whose Public?: Parochialism and Paternalism in State Charity Law Enforcement’ (2004) 79(4) Industrial Law Journal 937.